At November’s pace, 5 percent unemployment by the end of Obama’s second term

November’s jobs report painted a rosier view of the economy, and if job growth continued at the same pace — or even slightly less — the unemployment rate would fall to 5 percent by the end of President Barack Obama’s second term. Photo courtesy of Jay LaPrete/Getty Images.

203,000 new jobs, according to the payroll survey of employers, with an upward revision of 8,000 for the past two months; nearly a million more people working, according to the monthly survey of 60,000 American households; the official unemployment number down from 7.3 to 7 percent; our more inclusive U-7 number of all Americans who say they want a full-time job but don’t have one down a million people from October alone to 15 percent, the total now well below 25 million for the first time since we began reckoning U-7 a few years ago. Our “Solman Scale” measures the “U-7,” adding to the officially unemployed part-timers looking for full-time work and “discouraged” workers — everyone who didn’t look for a job in the past week but says they want one.

Admittedly, the strong job numbers reflect the end of the government shutdown — everyone expected this month to be unusual. But to be fair, instead of in our default mode — carping — plug a target unemployment rate of 5 percent into the Atlanta Federal Reserve’s jobs calculator and give President Barack Obama his remaining 37 months in office to get there, and the economy is now exceeding the 193,969 jobs a month it needs to generate. And jobs were generated in every sector of the economy last month.

Surprisingly, given all the positive indicators: the number of long-term unemployed didn’t budge. As the Bureau of Labor Statistics news release put it: “the number of long-term unemployed (those jobless for 27 weeks or more) was essentially unchanged at 4.1 million in November.” Those are essentially the same words and numbers the BLS has been using for months. And as the pool of the unemployed shrinks, the proportion of long-term unemployed to the total rises. It’s now up to 37.3 percent of all those officially counted as unemployed.

What, then, should the country do about extending — or not extending — unemployment insurance benefits, an issue that looms with the coming of the New Year? Thursday, producer Diane Lincoln Estes interviewed James Sherk of the Heritage Foundation about the effects of unemployment insurance (UI).

“There’s no doubt that many workers are struggling,” said Sherk (this was before this Friday’s numbers), “but extended unemployment benefits can keep workers unemployed longer. Federal Reserve Bank economists have found that workers become more selective in their job search when they have longer benefits, and this also causes employers to create fewer new jobs because the potential applicants become more selective. In the long term, the benefits can keep workers unemployed longer and hurt the very people we’re trying to help. Let’s not forget what happened in North Carolina. In July, the state ended their extended benefits, and over the next few months, unemployment has dropped very rapidly in the state.”

I’m about to leave for an interview with Northeastern University economist Barry Bluestone to hear the other side of the story, slated to run Friday on the NewsHour. Stay tuned.

This entry is cross-posted on the Making Sen$e page, where correspondent Paul Solman answers your economic and business questions

Follow @paulsolman